AREIT bucks pandemic crunch with earnings above target

MANILA, Philippines — Despite the pandemic hanging over businesses head in 2020, the Philippines’ first real estate investment trust (REIT) exceeded its earnings target on the first year.

Ayala-backed AREIT Inc. generated profits worth P1.23 billion on the back of “stable operations during the pandemic,” the company disclosed to the stock exchange on Wednesday.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), another measure of financial strength, stood at P1.58 billion, beating AREIT’s self-imposed target by 4%. Revenues surpassed goal by 3% to P1.95 billion.

“Operations remained strong throughout the year. Business resilience, health and safety of all our building locators and service personnel were our focus areas as all our properties remained open throughout the pandemic,” Carol Mills, president and chief executive, said in a statement.

AREIT braved pandemic uncertainties last year and made debuted on the stock exchange with properties concentrated on retail and offices. As REIT, the firm is mandated to declare 90% of its earnings as dividends to its stockholders, 45.18% of which are public.

With a stellar performance amid a tumultuous year, AREIT rewarded shareholders with dividends equivalent to P1.32 per share, “slightly higher” than initial program during the maiden share sale. 

The company pledged to provide 10-12% total shareholder return per year.

But more than generating earnings for its investors, AREIT’s success in 2020 is to be gauged by how it recycled capital from rents and leases in its properties, as well as other revenues, to purchase more assets. In less than a year since going public in August, the REIT’s gross leasable space more than doubled to 344,000 square meters from 153,000 sqm.

Among the company’s investments last year was the acquisition of the Teleperformance Cebu Building in September, a buyout followed by the purchase of The 30th Mall in Ortigas from its parent Ayala Land Inc. last month. 

In a separate disclosure to the local bourse, Ayala Land announced plans to merge its subsidiaries under its own name. These subsidiaries were Cebu Holdings Inc., Asian I-Office Properties Inc., Arca South Commercial Ventures Corp. and Central Block Developers Inc. and was meant “as a consolidation of ALI’s Cebu portfolio under one listed entity.”

Ahead of a non-working holiday on Thursday to commemorate the anniversary of People Power revolution, shares in AREIT lost 0.88% to P33.90 each. Shares in Ayala Land, meanwhile, closed up 1.18% to P38.65 apiece.